Stocks Decline on Doubt 'Fiscal Cliff' Deal Will Get Done

The president will meet with House and Senate leaders today to broker a deal before the Dec. 31 deadline.

Parris Kellermann

NEW YORK (TheStreet) -- U.S. stocks fell as President Obama aims to break a stalemate on so-called fiscal-cliff talks with House and Senate leaders before a Dec. 31 deadline.

Obama has three days to broker a deal with lawmakers before taxes automatically rise and spending cuts take hold, a combination that could push the economy into a recession. He will meet at 3 p.m. New York time today with House Speaker John Boehner and Senate Minority Leader Mitch McConnell, and Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi.

Obama will propose a scaled-back package today, Bloomberg reported, citing a Democratic aide with knowledge of the president's plans.

Reid said Thursday that Republicans are stalling in finding a solution, a comment that sunk equity markets. Later in the day, stocks rebounded after Republicans said they're prepared to work over the weekend to meet the Dec. 31 fiscal-cliff deadline.

Treasury Secretary Timothy Geithner said Wednesday he will do all he can to create a cushion for lawmakers. He said in a letter to Reid that the federal government will reach its $16.394 trillion statutory debt limit on Dec. 31.

Geithner said the Treasury is planning "extraordinary measures" to postpone defaulting on $200 billion in bond payments and create some "headroom" for Washington beyond New Year's Day.

The Dow Jones Industrial Average declined 75 points, or 0.6%, to 13,021.09 as of 11:34 a.m. New York time.

The S&P 500 fell 7 points, or 0.5%, to 1,411.11. The Nasdaq dropped 8.5 points, or 0.3%, to 2,977.44.

On the 30-member Dow, 29 stocks fell, with Hewlett-Packard(:HPQ) declining the most, at 2%. Chevron(:CVX) and Exxon Mobil(:XOM) were the only other Dow stocks to drop more than 1%. American Express(:AXP), up 0.5%, was the only company to rise.

The economic calendar in the U.S. on Friday includes Chicago-area business conditions (PMI report) and pending home sales.

Pending home sales climbed 1.7% to an index reading of 106.4 after a revised 5% jump in October, according to the National Association of Realtors.

In a separate report, the Chicago business barometer advanced to 51.6 this month from 50.4 in November. A reading of 50 is the line between expansion and contraction.